Bain & Company: AI Investments Are Set to Reach Between $780 Billion and $990 Billion by 2027
The 2024 Global Technology Report from Bain & Company highlights that investments in AI-focused technology have surpassed $700 billion. The report emphasizes the rapid rise of artificial intelligence within the technology sector and its potential to drive transformations across various industries.
It indicates that by 2027, the AI market—including hardware and software—is expected to grow between $780 billion and $990 billion. This growth rate suggests an increase of 40% to 55%, and the report points out that this outcome will be driven by the integration of AI solutions into business processes, leading to increased efficiency across sectors.
Armando Guastella, a Partner at Bain & Company Istanbul, commented, “Generative AI is the primary actor in the current wave of change. However, this necessitates the adaptation of changes and business processes in a way that enhances their value post-globalization, which complicates the situation." He added, “Companies are moving beyond the experimental phase and beginning to deploy generative AI at an enterprise scale. In this process, CIOs will need to sustain AI solutions at scale for companies to succeed in a rapidly changing environment. This is not just a trend; it represents a fundamental change in business models and processes. It will reshape all sectors and create significant opportunities for those who act quickly.”
Chip Shortage The report notes that semiconductors are in a delicate balance, which can deteriorate rapidly, stating, “Although the chip shortage caused by the pandemic is now a thing of the past, executives are beginning to prepare for the next potential crisis that AI may cause.” It further mentions that the rapid adoption of AI will increase demand for computing resources to develop and run large language models. This high demand, when confronted with supply chain constraints, will also complicate the procurement of graphics processing units (GPUs) for data centers.
Additionally, the report suggests that the proliferation of AI-enabled devices could create a wave of purchases in the new personal computer and smartphone markets, significantly impacting the broader semiconductor supply chain.
Sovereign AI The report emphasizes that governments worldwide are spending billions to subsidize AI models and that local data providers will account for nearly a quarter of the new computing capacity coming online in the coming years. It states, "Despite the momentum gained by independent AI, technology giants capture significant advantages over local competitors due to their global scale and financial power. As tech companies compete to harness AI opportunities, executives are now grappling with the complexities introduced by 'Sovereign' AI blocks emerging around the world."
The report highlights that many countries are implementing subsidies for the provision of AI models equipped with local data and presents findings indicating, "Governments view the protection of privacy for localized AI data, ensuring national security, and the establishment or strengthening of local high-tech ecosystems as critical issues for economic growth. AI will now have to be built as a physical infrastructure service, requiring significant capital investments in data centers and energy grids."
Turgut Özal, a Senior Manager at Bain & Company, remarked, “Governments around the world are spending billions on sovereign AI projects. Turkey has a strategic opportunity to strengthen its local AI infrastructure, which will provide significant advantages to businesses and policymakers."
Increasing Capacity Demand and Data Centers The report also notes that demand for computing power for AI is expected to fundamentally expand the scale of large data centers over the next 5-10 years. It is projected that the capacity of large data centers operated by hyperscale cloud service providers will rise from 50 megawatts to 200 megawatts.
The report states that the large burden imposed by AI will drive these companies to explore data centers with a capacity of 1 gigawatt and above, which will have significant implications for the ecosystems supporting these centers (including infrastructure engineering, energy production, and cooling) and impact market valuations. It mentions, “The architectural requirements needed to provide the computing, energy, and cooling intensity required for gigawatt data centers will influence the design of many smaller data centers."
AI Investments The 2024 Global Technology Report published by Bain & Company includes information on AI investments, stating, "In 2024, AI investments have increased by 15% compared to the previous year. The driving force behind this growth is the efficiency and innovation capabilities that AI offers to business processes. AI solutions are enhancing labor productivity by 20% and leading to significant transformations in critical sectors such as finance, healthcare, and manufacturing. Bain & Company representatives in Turkey emphasize that Turkey is also part of this global trend, highlighting that AI investments are strengthening the local technology ecosystem. Significant projects are being implemented in Turkey in this area, and it is anticipated that this trend will accelerate in the future."
OTHER FINDINGS IN THE REPORT INCLUDE: Continuing Expansion of AI Across Sectors “AI is transforming not only the technology sector but many others as well. AI-based technologies such as automation, data analytics, and machine learning are increasing operational efficiency while enhancing customer experiences.”
Slow Software Development Cycles Challenge the Sector “Slow software development cycles negatively impact companies' speed to market with new products. Technology firms are working on AI-based solutions to develop faster and more efficient software processes. The report offers strategic recommendations to overcome these two challenges and suggests new approaches for companies to tackle them.”
Strategic Investment Recommendations The integration of AI technologies into business processes has the potential to reduce costs and enhance operational efficiency, and investments in these solutions are expected to continue to rise in the coming years.